RLD.L Regulatory News (RLD)

6 Sep 2005 08:24

Tanzanite One Limited06 September 2005 TANZANITE ONE LIMITED Incorporated and Registered in Bermuda Exempt Company Number EC33385 ("TanzaniteOne" or "the Group") HALF YEARLY RESULTS: 30 JUNE 2005 "Tanzanite One reports record profit: US$7.2 million for the half year to 30 June 2005" HIGHLIGHTS Financial - Gross margin of 66% achieved on US$22.4 million revenue- Net profit US$7.2 million- Basic earnings per common share of 10.26 US cents- 1 US cent per share interim dividend declared, payable on 29 October 2005- Cash and near cash balances of US$13.0 million (including receivables ofUS$8million received in early July 2005)- US$10.2million cash generated in operations, before working capital changes- Interest bearing debt reduced to US$40 000 Operational- Solid mining platform delivering sound results- 576,933 carats recovered during the period- 12,161 tonnes processed at a grade of 47 carats per tonne- Optical sorting equipment installed for improved recoveries and efficiencies Strategic- Sightholder strategy supporting market confidence- Brand building strategies successfully executed in jewellery business TanzaniteOne announces consolidated net earnings of US$7.2 million (US10.3 centsper share), with cash earnings (before depreciation and amortisation) of US$7.7million. Comparisons with the previous corresponding period are not appropriateas the Company commenced operations in May 2004 following the acquisition of itstanzanite business. Commenting on the results, Mike Nunn, CEO of TanzaniteOne said, "Each part ofTanzaniteOne's vertically integrated supply chain is building on the strategicdevelopments initiated in the earlier part of this year. These first six monthsof 2005 form a solid basis from which TanzaniteOne is expected to comfortablyachieve its targets for the 2005 financial year and we remain optimistic thatthis track record of growth and delivery will be maintained in the comingyears". Key indicators: 6 months to 30 1 month to 30 6 months to 31 June 2005 June 2004 December 2004Revenue US$22.4 million US$2.5 million US$13.7 millionGross profit margin 66% 59% 54%Net profit after tax and outside US$7.2 million US$0.4 million US$3.2 millionequity interests Revenue for the six months under review was US$22.4 million, significantlyhigher than the Group's initial six months sales figures to December 2004 ofUS$13.7 million. This increase in revenue reflects a combination of increasedtanzanite sales and higher prices achieved due to the higher proportion of gemquality rough tanzanite recovered during the period; a reflection of the Group'simproved mining strategies. Average rough prices achieved were approximatelyUS$13 per carat (6 months to 31 December 2004: US$9). The significant increasein revenue per carat on mine is a direct result of the improvement in thequality of the produced material (colour/clarity/size) over the period. This hastranslated into enhanced gross margins up at 66% (6 months to 31 December 2004:54%), assisted by effective cost containment initiatives. During the period interest bearing borrowings were reduced from US$2.6 millionat December 2004 to US$40 000 following the sale of surplus assets. The sale ofthese surplus assets has also resulted in a decreased depreciation charge ofUS$0.5 million, from US$1.0 million in the prior period. The Group's mine performed well during the period with production of 576,933carats of tanzanite from 12,161 tonnes of processed ore. On mine cash costsremained under control at US$2 per carat (6 months to 31 December 2004: US$2).Grade achieved was 47 carats per tonne. Operating expenses were stable during the period at US$5.8 million. As at 30 June 2005, TanzaniteOne had trade and other receivables of US$11.5million (2004: US$4.4 million) as a sight was held just prior to the period endwith settlement taking place subsequent to period end. Receivables of US$8.0million have subsequently been converted to cash and have been included in cashand near cash at 30 June 2005. The effective tax rate of the Group was 19%. Operational review MiningThe period was characterised by strong operational developments. TanzaniteOneMining introduced a number of initiatives to improve grade recovery.Specifically, optical sorting technology was introduced to the recovery process,which is showing favourable results with improved efficiencies and graderecovery. Various technologies are being tested to improve security measures andthereby reduce shrinkage. Processing capacity remains underutilised asunderground development and ore extraction capabilities continue to be expanded. Whilst safety measures remain of the highest standard, regretfully the mineexperienced its first fatality in an underground rock fall in May 2005. This isthe first fatality since the mine opened in 2000. Outside BuyingTanzaniteOne Trading the Group's 75% owned subsidiary manages the Arusha basedrough tanzanite buying operation that continued to deliver strong volumes.During the six months under review, outside buying contributed 41% of theGroup's total rough tanzanite sales. As is expected, the percentage contributionby the rough trading operation will reduce as the Group's mine continues toincrease production. Rough Tanzanite Sales TanzaniteOne Marketing saw a positive response to its Preferred SupplierStrategy with sightholders taking all tanzanite parcels offered during the firstthree sights of 2005. Demand has been strong during the first six months of 2005and prices across grades have remained firm. Polished Tanzanite Sales TanzaniteOne's jewellery and polished tanzanite wholesale business, TheTanzanite Company, continued its expansion into new territory. Polished and settanzanite contributed US$3.4 million in revenue in the period under review.Encouraging growth was experienced in the emerging UK market where its relativecontribution to sales increased to 15% from 13% in the prior period. Newjewellery ranges were launched and exhibited in line with the company's drive topromote its branded jewellery range - Tanzanite Blue. Tanzanite FoundationThe Tanzanite Foundation, an industry supported non-profit organisation whichwas provided with seed funding by TanzaniteOne, has opened an office in Londonand commenced tanzanite promotions in Europe. The Tanzanite Foundation plans toopen an office in New York before the year end and is investigating Dubai andHong Kong to access Middle Eastern and Chinese markets respectively. Furthergrowth in demand for tanzanite is expected as these new markets open up, andincreased promotional activity will be funded by wider industry participation inthe Tanzanite Foundation. Outlook TanzaniteOne remains confident of a strong outlook for the tanzanite industryand continues to stimulate demand in new markets whilst maintaining momentum incurrent markets. The discovery of the largest tanzanite ever found, the 17,250carat Mawenzi, at TanzaniteOne's mining operation in July 2005 has generatedincreased interest in tanzanite and provides a unique opportunity to produce aniconic piece of jewellery to celebrate this event. Further resources are expected to be firmed up from current explorationactivities both within the Group's existing mining licence area and on variousprospecting licences adjacent to the mining licence, potentially lengthening thecurrent life of mine beyond the presently estimated 15 years. Basis of preparationThe accounting policies adopted for the purposes of these interim resultscomply, in all material respects, with International Financial ReportingStandards, as well as with applicable legislation, and are consistent with theaccounting policies as applied in the previous year, except for the adoption ofIAS21 (revised). The consolidated accounts include the reviewed accounts of the company and eachof its subsidiaries and have been prepared using accounting policies consistentwith those adopted for the preparation of the annual audited Financial Statements. They are stated in US Dollars which is the reporting currency of theGroup. The financial information set out below is based on the consolidated financialstatements of TanzaniteOne and its subsidiary companies. Tanzanite One Limited Consolidated Income Statement Half Year ended 30 June 2005 Half Year ended Full Year endedUS$'000 30/06/05 30/06/04* 31/12/04 ** Note:Revenue (i) 22,369 2,517 16,168Cost of sales (ii) (7,570) (1,042) (7,273) ---------- --------- ----------- Gross profit 14,799 1,475 8,895 Administration and other (5,819) (911) (4,913)operating costsNet finance costs (1) (42) 116 ---------- --------- -----------Profit before tax 8,979 522 4,098Income tax expense (1,735) (172) (525) ---------- --------- -----------Profit after tax 7,244 350 3,573Minority interest (iii) (42) - (6) ---------- --------- -----------Net profit 7,202 350 3,567 ---------- --------- -----------EPS (basic - US cents) 10.26 0.29 6.95EPS (diluted - US cents) 9.59 6.74 Notes:* Figures for the period ended 30 June 2004 reflect 1 month's operations as theGroup commenced operations in May 2004 following the acquisition of itstanzanite assets. ** Figures for the period ended 31 December 2004 reflect 7 months operations asthe Group commenced operations in May 2004 following the acquisition of itstanzanite assets. These figures have been restated following the adoption ofIAS21 (revised). Refer Statement of Changes in Equity. (i)Revenue is higher in line with increased sales and higher proportion of high quality tanzanite produced(ii)Cost of sales are well contained reflecting cost containment initiatives(iii)Minority interest reflects Abdulhakim Mulla's 25% outside equity interest in TanzaniteOne Trading Tanzanite One Limited Consolidated Cash Flow Statement Half Year ended 30 June 2005 Half Year ended Full Year endedUS$'000 30/06/05 30/06/04* 31/12/04** Cash flows from operating activitiesCash utilised in operations (1,139) (1,820) (1,553)Net financing (cost)/income (1) (42) 116Taxation refund received/(paid) 387 (36) (146)Dividends paid (81) - - --------- -------- -----------Net cash utilised in operations (834) (1,898) (1,583) Cash flows from investing activitiesAcquisition of subsidiaries, net of cashacquired - (24,218) 4,634Acquisitions of property, plant andequipment (872) (93) (3,119)Proceeds on disposal of property, plantand equipment 1,794 - 7 --------- -------- -----------Net cash from investing activities 922 (24,311) 1,522 Cash flows from financing activitiesNet proceeds from issue of share capital 211 28,964 12,296Share based payments 332 - -Repayment of loans from Afgem Limited - 2,863 (5,368)Decrease/(repayment) of long-term loans 76 - (164)(Repayment)/increase in interest-bearingborrowings - current (442) (54) 458Repayment of interest bearing borrowings- (2,110) - (252)non-current --------- -------- -----------Net cash from financing activities (1,933) 31,773 6,970 --------- -------- -----------Net (decrease)/increase for the period (1,845) 5,564 6,909At beginning of the period 6,909 - - --------- -------- -----------At end of the period 5,064 5,564 6,909 --------- -------- ----------- Notes:* Figures for the period ended 30 June 2004 reflect 1 month's operations as theGroup commenced operations in May 2004 following the acquisition of itstanzanite assets. ** Figures for the period ended 31 December 2004 reflect 7 months operations asthe Group commenced operations in May 2004 following the acquisition of itstanzanite assets. Tanzanite One Limited Consolidated Balance Sheet At 30 June 2005 US$'000 30/06/05 30/06/04 31/12/04 Non-current assetsProperty plant and equipment 18,785 18,155 21,107Intangible assets 2,000 2,000 2,000Long-term loans 88 92 164Deferred tax 606 678 203 -------- -------- --------Total non current assets 21,479 20,925 23,474 -------- -------- -------- Current assetsInventory 14,418 7,953 12,621Income tax receivable - 333 663Short-term loans - 1,573 -Trade and other receivables 11,503 2,896 4,384Cash and cash equivalents 5,064 5,564 6,909 -------- -------- --------Total current assets 30,985 18,319 24,577 -------- -------- --------Total assets 52,464 39,244 48,051 -------- -------- -------- Non-current liabilitiesInterest-bearing borrowings 40 2,131 2,149Provisions 82 100 82Deferred tax liabilities 2,775 1,144 2,391 -------- -------- --------Total non current liabilities 2,897 3,375 4,622 -------- -------- -------- Current liabilitiesInterest-bearing borrowings 16 312 459Income tax payable 1,583 - 273Short-term loans - 4,436 -Trade and other payables 1,193 1,082 1,877 -------- -------- --------Total current liabilities 2,792 5,830 2,609 -------- -------- --------Total liabilities 5,689 9,205 7,231 -------- -------- -------- -------- -------- --------Net assets 46,775 30,039 40,820 -------- -------- -------- EquityShareholders' equity 46,616 29,823 40,622Minority interest 159 216 198 -------- -------- --------Total equity 46,775 30,039 40,820 -------- -------- -------- Number of shares in issue 70.4 million 120 million* 70.1 millionNet asset value per share 66.47 cents 25.03 cents 58.19 cents * A three for one share consolidation was done during July 2004. Tanzanite One Limited Statement of Changes in Equity Half Year ended 30 June 2005 Common A class Total Share Retained Share Foreign Total Minority Total share share share premium earnings options currency interest equity capital capital capital translation reserve US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Balance at 21 1 22 35,675 4,411 - - 40,108 198 40,306 31 December 2004 Share - - - - (139) 139 - - - - based payments - prior year adjustment Restatement - - - - (1,357) - 1,357 - - - due to adoption of IAS 21 (revised) - Note (i) Issue of - - - 197 - - - 197 - 197 common share capital Issue of A - - - 14 - - - 14 - 14 class share capital Profit for - - - - 7,202 - - 7,202 42 7,244 the period Share - - - - - 193 - 193 - 193 based payments Foreign - - - - - - (1,098) (1,098) - (1,098) currency translation reserve Dividends - - - - - - - - (81) (81) declared Closing 21 1 22 35,886 10,117 332 259 46,616 159 46,775 balance 30 June 2005 Note: (i) The impact of adopting IAS21 (revised) is that translation differencespreviously charged to the Income Statement are now accounted for in Equity. The reason for this is that the previous IAS21 statement required translationdifferences on foreign integrated operations to be charged to the IncomeStatement. IAS21 (revised) now requires the determination of the functionalcurrency for each entity in the group and translation differences for entitieswith different functional currencies to be charged to Equity. Tanzanite One LimitedIncorporated in BermudaExempt company number EC33385 Board of DirectorsMichael Adams Non-executive ChairmanAmi Mpungwe Non-executive Deputy ChairmanMike Nunn Chief Executive OfficerIan Harebottle Chief Operating OfficerMark Summers Chief Financial OfficerEdward Nealon Non-executive directorNicholas Sibley Non-executive directorBruce Sutherland Non-executive directorGeorg von Opel Non-executive directorGustav Stenbolt Alternate to Georg von Opel Audit/Risk CommitteeNicholas Sibley (Chairman)Michael AdamsGustav Stenbolt Remuneration/Succession Planning CommitteeMichael Adams (Chairman)Ami MpungweEdward Nealon Mining and Geology CommitteeBruce Sutherland (Chairman)Ian HarebottleEdward Nealon Nominations CommitteeThe Nominations Committee comprises the Full Board Company SecretaryWilli Boehm Issued CapitalAt 30 June 2005, the Company had on issue:70,373,811 fully paid common shares4,559,611 unlisted Tanzanite One SA A class share options Substantial Shareholders No. of Shares Percentageat 30 June 2005Rembrandt Nominees 23,204,945 37.26 %Jade Pacific Resources 14,246,376 22.87 %Euroclear Nominees 6,792,747 10.91 %Bear Stearns Securities 2,811,941 4.51 %Cayenne Asset Management 2,680,867 4.30 %Ruffer Investment Management 2,100,952 3.37 % Nominated Advisor and broker (AIM)Williams de Broe Plc6 BroadgateLondon EC2M 2RPTelephone: +44 207 588 7511Facsimile: +44 207 588 8860 Tanzanite One (SA) Limited(Incorporated in the Republic of South Africa)Registration Number: 2001/003177/06 10 Melrose BoulevardMelrose Arch2196Johannesburg South AfricaTelephone: +27 11 214 1000Facsimile: +27 11 214 1010Email: iro@tanzaniteonesa.com ManagementMike Nunn Chief Executive OfficerIan Harebottle Chief Operating OfficerMark Summers Chief Financial OfficerZane Swanepoel TanzaniteOne Mining, General ManagerAdrian Banks TanzaniteOne Trading, Managing DirectorCandice Nunn TanzaniteOne Marketing, Managing DirectorJason Krause The Tanzanite Company, Managing Director For further information regarding these results, please contact: In United Kingdom:Conduit PRLeesa Peters+44 20 7936 9095 In South Africa:Tanzanite One (SA) LimitedMark Summers, Chief Financial OfficerRenata Da Silva, Corporate Affairs+27 11 214 1000 or visit: www.tanzaniteone.com This information is provided by RNS The company news service from the London Stock Exchange